Vultures Over North Korea Fly South for the Winter

The wrong Korea seems to be collapsing.

This week, it is not North Korea’s isolated Communist regime, beset by famine, which seems on the edge. Rather, it is South Korea’s capitalist system, drowning in a sea of bad debt.

In Seoul, this sudden reversal of roles inspires gallows humor. All the cliched phrases and ideas that have been so often applied to North Korea’s failures are suddenly being directed at the South.

Can the world work out a “soft landing” for South Korea? Will a South Korean collapse lead to a flood of refugees seeking to rush across the border toward the north? Are Japan and China secretly conniving to keep South Korea alive in order to make sure there isn’t a powerful, reunified Korea in their neighborhood?

These are merely jokes. Things in South Korea aren’t quite that bad. But it does appear that the economic crisis is warming the heart of North Korea’s reclusive leader, Kim Jong Il.

“North Korea has already started broadcasting about the possibility of a South Korean collapse,” reports Se Hyun Jeong, president of the Korean Institute for National Reunification.

North Korea also is flexing its muscles--Jeong says the country’s army is in the process of launching its annual winter training exercise. “This is really a full-scale exercise, fully equipped and supplied with maximum resources,” he says.

In the South Korean presidential campaign that ends Thursday, not too much is being said about North Korea. The main issue remains the economic crisis and the International Monetary Fund’s rescue package, which imposes tough new requirements for the South Korean economy.

Indeed, for now the IMF has replaced North Korea as the main bogeyman in South Korea’s politics. For a few days last week, some of the candidates were running against the IMF the way their predecessors used to run against the late North Korean leader, Kim Il Sung.

Despite the emptiness of the campaign, the economic crisis has had profound implications for the future of the two Koreas, and for how they will deal with one another after a new president takes office in South Korea.

First, it will be harder for South Korea to provide the economic help for North Korea that had earlier been envisioned.

South Korea has been providing rice and other food aid to the north. But one advisor to President Kim Young Sam admitted last week that if the government were to propose more free food or other aid now, “People in this country will say we’re crazy.”

Furthermore, South Korea has said it will pay most of the costs of the civilian nuclear reactor that is being given to North Korea as part of a 1994 deal to stop the North Korean nuclear weapons program. But the cost of South Korea’s share is estimated to be several billion dollars, and there are some doubts about whether the country will pay it.

“I don’t know whether the National Assembly will approve the money,” admitted one South Korean official.

Additionally, the new economic problems will make it more difficult for South Korean businesses to trade or invest in North Korea.

The underlying, long-term economic logic of a deal between South and North Korea is still there. South Korea has technology and (usually) capital. North Korea offers land and a regimented Korean-speaking work force. The wage levels in North Korea are, as one official here phrased it, “cheaper even than China.”

South Korean companies had been rushing to the north to gain a foothold there, and trade between the two countries is now close to $300 million a year. But now, South Korean businesses will have to worry about being accused of wasting money in the north that is needed at home.

So in the short term, North Korea will probably look to Japan for its economic salvation. The entire focus of Pyongyang’s diplomacy currently is aimed at obtaining a peace treaty with the United States, in order to win American acquiescence for a large-scale Japanese aid program. As part of this diplomatic campaign, Pyongyang seems to be launching a full-scale public-relations offensive in the United States.

South Korea’s economic woes also will inevitably affect the way the North and South Korean governments behave toward each other.

“There will be less incentive for North Korea to have any deals with us,” says former South Korean Foreign Minister Han Sung-joo. “The North Koreans will have an even greater incentive to deal with the United States and Japan.”

That’s the common view here, but there may well be another possibility. North Korea could decide that now is a good time to try to do business with the south. Over the past few years, South Korea has been dealing with the north from a position of overwhelming strength. Now, Seoul will be less superior and less secure.

Whoever wins Thursday, will be sworn into office in February as South Korea’s next president. Next April, on the 50th anniversary of the North Korean state, Kim Jong Il may assume the title of president of his country. Start looking next spring for movement toward an unprecedented summit meeting between the leaders of the two Koreas.

What would they say to one another? Maybe they can try to decide which of the two Koreas will really collapse.

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Jim Mann’s column appears in this space every Wednesday.